Post Office Cuts Opposed By Senate Bill

WASHINGTON -- A Senate bill aimed at saving the U.S. Postal Service would make it harder to close thousands of low-revenue post offices and end Saturday mail delivery, even though the struggling agency says those moves are just what's needed to reduce its massive debt and become profitable again.

The measure takes steps to help the agency avert bankruptcy as early as this fall, through a cash infusion of $11 billion to pay off debt and reduce costs by offering retirement incentives to 100,000 employees. But the bill sidesteps decisions on postal closings, buying time for lawmakers who would rather avoid the wrath of voters in an election year.The Senate planned to vote as early as Wednesday on a final bill, after considering amendments that could restrict the Postal Service from further cuts to first-class mail delivery. During debate, lawmakers agreed to hold off closing rural post offices for a year, give communities new ways to appeal, prevent any closings before the November elections but also shut five of the seven post offices on the Capitol grounds.

The final bill was expected to pass the Senate but faces an uncertain future. The House has not taken up its own version, which would create a national commission with the power to scrap no-layoff clauses in employee contracts.

"This of course kicks the can down the road," complained Sen. John McCain, R-Ariz., who unsuccessfully pushed for a commission in the Senate bill. He said the current proposal failed to address longer-term fixes and delayed major decisions. "We'll be on the floor in two years addressing this issue again, because it is not a solution."

Postmaster General Patrick Donahoe also has criticized the Senate bill as a short-term answer. Noting that more people every year are switching to the Internet to send letters and pay bills, he has called the Postal Service's business model "broken." The agency has estimated that the Senate bill would only provide it enough liquidity to continue operating for two years or three years.

The Postal Service said Wednesday it preferred legislation "that will provide it with the speed and flexibility to adapt to a changing marketplace for mailing and shipping products."

At stake are more than 100,000 jobs, part of a postal cost-cutting plan to save some $6.5 billion a year by closing up to 252 mail-processing centers and 3,700 post offices. The agency, $12 billion in debt, says it needs to begin closings this year. At the request of Congress, Donahoe agreed to delay closings until May 15 to give lawmakers time to pass legislation.

The Senate bill proposes cutting about half the mail processing centers the Postal Services wants to close, from 252 to 125, and allowing more areas to maintain overnight first-class mail delivery for at least three more years. Beyond the one-year freeze on closing rural post offices, the Postal Service would face additional layers of approval before closing any mail facility.

The Postal Service on Tuesday circulated a smaller list of mail processing centers that probably would close under the Senate bill; many in more rural or small states would be spared. For instance, centers would survive in Connecticut, Delaware, Maine, Missouri and Vermont, whose senators were sponsors of the postal bill or pushed amendments, according to the preliminary list obtained by The Associated Press. A facility in Easton, Md., also would stay open. Sen. Barbara Mikulski, D-Md., previously attempted to block the postal bill in protest of that specific closure.

Also surviving were all four mail processing centers in Nevada, home to Senate Majority Leader Harry Reid, as well as all eight centers in Colorado and all five centers in Utah.

The Postal Service would get an infusion of roughly $11 billion, which is basically a refund of overpayments made in previous years to a federal retirement fund. The money could pay down debt and finance buyouts to 100,000 postal employees.

The agency could make smaller annual payments into a future retiree health benefits account, gain flexibility in trimming worker compensation benefits and find additional ways to raise postal revenue under a new chief innovation officer.

An amendment approved Tuesday would bar the Postal Service from closing post offices for one year if they are in areas with fewer than 50,000 people, unless there was no significant community opposition.

After one year, the agency would have to take rural issues into special consideration. Post offices generally would be protected if the closest mail facility was more than 10 miles away.

"Our post offices are the lifeblood for towns across our state and a source of good-paying jobs in areas hard-hit by the economic downturn," said Sen. Claire McCaskill, D-Mo., who co-sponsored the amendment. "This amendment protects rural post offices, with a realistic eye toward the future."